Question:

Why is an increase in tax due to inflation an additional burden?

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I get that when inflation occurs, accounting profits of businesses tend to be exaggerated and that although it shows that they are earning a lot nominally, they are in fact earning nothing

And I know that an increased reported profit results in increased taxation

But I don't get why increased taxation is an additional burden, because then shouldn't the real value of the tax be constant, as only the nominal value increases? If the increase in nominal profit is worth nothing because of infl., then shudnt the increase in tax also be worth nothing?

thanks so much guys

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1 ANSWERS


  1. I don't know

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